Friday, May 13, 2011

Politics politics and more politics

Today's, Heritage Foundation Morning Bell hits the mark when it comes to the Obama Administration's penchant for playing politics with just about every subject under the sun. The President's reckless comments at the border, defiance of two court orders to reinstate oil drilling permits in the gulf and his shameless bin Laden victory tour have shown that nothing is above politics to this Administration.

Though Congress is implementing the bash- the- oil companies strategy, the effort transparently tears a page out of the Democratic/Obama playbook. Heritage focuses on the critical issue in lowering prices at the pump: removing the barriers to production.

"There's much the president and Congress could do if they truly wanted to give Americans a break at the gas pump. For starters, they could provide access to our country's domestic energy reserves, roll back regulatory burdens on companies and lift the de facto moratorium on offshore drilling permits.

Attacking the oil industry might satisfy the left's bloodlust against corporate America, and it might play well in press conferences. But targeted tax hikes against industries one might not like is not an answer to the high price of gas. It might feel good in the short run, but it's not a long-term solution to America's energy problems."

Friday, May 6, 2011

Tax Rates=Incentives=Revenues

About ten years ago, give or take, then California Governor Gray Davis gave a press conference to discuss the Golden State's financial crisis (yes, even then). In that press conference he explained to reporters that it was not that state government spent too much, rather that the revenues weren't large enough. The translation of his remarks for the economically naive is: despite the fact that Californians are among the highest taxed citizens in the nation (exceeding even New Yorkers) they weren't paying enough for the state's services. If they were, we can extrapolate from Mr. Davis' statement, the revenues would be great enough to cover spending.

Thou hath not changed much California.

Except in one regard: businesses and wealthy individuals are fleeing the state. In 2007 according to the Pew Research Center, California experienced net migration of -681,000 individuals. In other words, California, in one year alone lost almost 700,000 taxpaying citizens to other, more tax-attractive states. In one year alone. From 2004-2007 the net loss of California citizens was 1,900,000. That's 1.9 million.

The California revenue problem has continued to deteriorate.

Enter Dr. Arthur Laffer (who also exited California during that period). He identified the importance of tax policy to economic growth illustrated best by the Laffer Curve. The Laffer Curve demonstrates that lower tax rates increase incentives to produce income and economic growth thereby resulting in increased tax revenues. There are two points on the Laffer Curve--picture a side-saddle bell curve--where tax revenues equal zero: at a zero percent tax rate and at an 100% tax rate. The former equation is obvious--absence of a tax rate will result in no revenues. At a 100% tax rate, zero tax revenues are also collected because all incentives to produce are removed when the government's take reaches 100%.

Economic growth and job creation needs to return to the forefront of our national dialogue. A realistic and economically sound tax policy should be debated. Economic class warfare benefits no one. Dr. Laffer believes, "the 2012 election will be a referendum on the economic policies of President Obama."

I certainly hope so.

Rising Public Sector Costs in California

An informative and shocking video from Americans for Prosperity. Cut and paste.

Tuesday, May 3, 2011

Exponentially Expanding Debt Crisis

The Washington budget demagoguery was put on hold when Congress recessed. And now is taking a back seat to the capture and death of Osama bin Laden. Our Navy Seals are the finest in the world--the best investment tax payers make in my view--but we need to hold our elected official's feet to the mounting debt fire. The blaze is raging dangerously out of control.

An unprecedented U.S. budget and debt crisis looms. We cannot afford to look away for even a moment while the Congressional foxes are guarding the national treasury henhouse. The Heritage Foundation reminds us:

"Today’s national debt—the public debt that government has accumulated to finance its out-of-control spending—is approximately $14.3 trillion. To put that into perspective, the government’s annual budget for 2011, which is in itself bloated, is roughly $3.7 trillion. And to put the future health of our economy in perspective, President Obama proposed in his 2012 Budget proposal that we add $9 trillion to that debt over the next ten years."

The most accessible explanation of our mounting debt is available at the following URL. Cut and paste and watch the short video. It is well worth the trouble.